The mood in the mortgage industry these days is gloomy, and rightfully so. Originations in 1994 were down more than 25% from 1993, and quarter-to- quarter declines are approaching 50%. Industry profitability is declining, and some mortgage bankers would like to sell to a deeper-pocketed company.

However, the declining fortunes of the mortgage banking industry are lowering the value of mortgage companies, especially origination networks, enough to render such sales increasingly difficult. At least one mortgage company, Household Mortgage Services, has simply shut down its origination network without even attempting to attract bids.

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